Daily Market Report: May 20, 2011

Equities in India pulled the shutter for the week with stellar gains, soothing investors' nerves ahead of May F&O expiry on Thursday. The Sensex closed at 18326.09, up 184.69 points or 1.02% and the Nifty ended at 5484.25, up 56.15 points or 1.03%.

So, has investor sentiment livened up, finally? The market rallied on the back of the forward looking guidance given by Larsen and Toubro on Thursday. In fact, the recent rally could be attributed as a technical bounce, short covering, or just bottom fishing.

Going forward, the market is expected to remain range-bound. The longer it trades below its 200-DMA (day moving average), the likelihood of a negative trend is high. The Nifty and the Sensex have found support around 5,400 and 18,000 levels, respectively. However, the 50-scrip broadbased index will witness strong resistance around 5,700 levels.

The market these days lacks positive triggers. Domestically, they are looking up to positive global cues, followed by clear confusion as they are unable to find any. It is stuck in a narrow range of 5,300 on the downside and 5,550 on the upside. For the next few sessions, sentiments are expected to heat up ahead of May expiry.

Daily Market Report: May 19, 2011

The Indian stock market has managed to end the three-session losing streak today as frontline indices gained marginally in a lackluster session. The Nifty ended flat at 5,430, while the Sensex closed at 18,140, up just over 50 points.

The current situation looks grim as there is very little movement on the bourses. We are slowly drifting towards 5250 on NIFTY and many of our heavyweights have taken a pummelling. Midcaps too are showing no signs of recovery.  So overall we need some trigger to boost an otherwise gloomy session; something like the L&T move today.

Technically we are still in a downtrend, though it appears limited. I am not sure if there is too much of a downside below 5,300. I think maybe the next three or four trading sessions we will see some stability coming in. Once that happens, I will probably stick my neck out and say we are due for 250-300 points on the Nifty because we are deeply oversold.

There are some people who see the crystal ball in a different way. Mr Abhay Aima of HDFC Securities sees the Sensex hitting 24,000 by the end of this fiscal. "If there is a hypothetical industrial growth of 12%, the earnings index would grow 15-18%. Discounting FY13 earnings, gives you an index of around 23,000-24,000 by March’12. So you are looking at a 20-25% return from here. I don’t know many markets in the world which are looking at this kind of growth."

And what might lead the index to 24,000? Banks, says Aima. "They, even at the current level, have the pricing power. So contrary to what most analysts feel, well managed banks will maintain their margins and surprise people," he states. Infrastructure too needs to perform in order to life the Sensex to those levels. "They have a lot of impending projects," he reasons.

Senior stock analyst Mr Nakul Malhotra of ‘Money Matters’ strikes a different note as he believes that market could head towards a big correction. “There is a complete lack of interest in buying equities and if foreign funds do not support then we are heading towards 4800 on Nifty, ” he said.